I also got same error message on my iphone and my colleagues Android devices with both Moodle Mobile ver. 1.3 and 1.3.1.
I am using two authentication backend on my moodle, local database and external authentication (with MS SQL server).
But not all accounts can't login through Moodle Mobile. Just only users existed in SQL server can't. The users existed in local database are fine.
I read Mobile Moodle FAQ and not sure that FAQ #5 means those three ways external authentication are not supported or ALL external authentication methods?
I am running Moodle ver 2.5 on FreeBSD 9.1-R